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Stage 8 - Commercialisation

Stage 8

Commercialisation

The final stage of the new product development process is the commercialisation stage. It is defined in the Dictionary of Sports Studies (2014) as when ‘financial profit, becomes the underlying economic basis of sports organization’, therefore this shows that the commercialisation stage is about creating a plan for bringing your product/format to market to gain financial profit. The way the product is marketed is vital and there the ‘four p’s’ in the marketing mix (appendix A) are very important. They are price, product, place and promotion and it is crucial to consider all four of these if your product/format will be successful. The commercialisation stage has the potential to be very expensive, however, if done efficiently the organisation will see the benefits after this stage when the product is successful.

An example of where commercialisation has taken place and has been successful to an extent is the NatWest T20 Blast in the UK. With the introduction of this new competition format the ECB were trying to get more people watching their competition both at home and in the crowd. Firstly, they changed the name of the competition from the Friends Life T20 to the NatWest T20 Blast to attract more people. They also changed when the games were played and the majority of games were played on a Friday which was an attempt to encourage more families to watch. As Dobell (2014) states, ‘overall attendance will pass 700,000 for the first time in its 12-year history’ therefore showing that this commercialisation of the new competition was successful. Another technique they used was to create a fantasy team competition similar to that of fantasy football. This meant that people could not only go to watch the matches, they could also be a virtual manager of a team, and this would create interest throughout the competition highlighted in the attendance figures.

To commercialise R1 Racing the ‘four P’s’ in the marketing mix (Appendix A) will be used, which are: price, product, place and promotion. The product is the R1 Racing season that will be held. The aim of the early years of the competition is to run along the F1 season therefore an extra ten pounds will be added to the ticket price for the day the event is held. The place will be at the various F1 events held in Europe for the first year and then expand season on season. The promotion stage will be the most of the four areas for R1 Racing, because if it is going to grow into massive spectator sport a fan base needs to be established straight away. The aim is to negotiate a deal with a broadcasting channel such as Sky or BT to televise the format, from this a commercial will be made which will broadcast from around four weeks before the event to create anticipation and excitement for the first race.

Appendix A – The Marketing Mix

 

Reference List

• Dobell, G. (2014) T20 attendances tell two tales. Available at: http://www.espncricinfo.com/county-cricket-2014/content/story/773321.html (Accessed: 3^rd February 2015).
• Tomlinson, A. (2014) A Dictionary of Sports Studies. Available at: http://www.oxfordreference.com/view/10.1093/acref/9780199213818.001.0001/acref-9780199213818-e-262 (Accessed: 3^rd February 2015). 

Stage 7 - Test Marketing

Stage 7

Test Marketing

The seventh stage of the new product development process is the test marketing stage. It is defined in the Dictionary of Marketing (2011) as ‘a product test prior to launch with a small representative group’, therefore, it is releasing the product into a small area to see what the reaction to the product is like. It goes on to say that ‘feedback is gathered and the product can be improved before it is rolled out to a larger market or audience’. Also, Korotkov, Occhiocupo and Simkin (2013) believe that ‘test marketing secures business by seeking to avoid major failures’ therefore, by placing the product or format into the market and gathering information on how the small market reacted to the product, decisions can be made ahead of the final release of the format, as to whether to go ahead, make final adjustments or to not go ahead with the release of the format. However, there are disadvantages of doing this, which are, competitors could rush a similar format into production to reduce how successful your format is and it can also be expensive to carry it out.

An example of test marketing is that of the new ECB under 19 Twenty20 competition. To see how successful introducing this new competition would be, they ran four different competitions in Durham, Kent, Surrey and Yorkshire. They planned to see how people reacted to the competition and to see if it would be successful in delivering their aim of ‘boosting participation and keep more youngsters in the recreational game’ (ECB, 2014). However, they also wanted to see how giving the responsibility to the players in creating an occasion of each event, instead of arriving and everything being organised by just the coach. They also wanted to see if a new initiative of letting the players organise the game had the potential to make it into an event and not only make it fun for the participants but, also for the spectators, therefore boosting revenues at clubs. 

The test marketing process will be vital for R1 racing as it will be trying to break into the Formula One market and the formatting is crucial as this is the first event, to get the fan base they want. The first step will be to invite 50 people to watch an R1 event at a smaller circuit and feedback will be collected to see if any changes would have to be made before we then carry out another test market, on one of the practice days at the British Grand Prix held at Silverstone. Again, the event will be shorter than what a usual R1 racing event will be, with only three cars racing 10 laps each rather than four cars doing 12 laps. Holding an event here will mean feedback can be gathered from a large amount of people. The feedback collated from this event will then be reviewed to decide if any more changes are needed before the final commercialisation of R1 Racing.

Reference List

• Doyle, C. (2013) Test Marketing. Available at: http://www.oxfordreference.com/view/10.1093/acref/9780199590230.001.0001/acref-9780199590230-e-1747 (Accessed: 27^th January 2015).
• ECB. (2014) U19 club cricketers handed T20 opportunity. Available at: http://www.ecb.co.uk/news/articles/u19-club-cricketers-handed-t20-opportunity (Accessed: 27^th January 2015).
• Korotkov, N., Occhiocupo, N. & Simkin, L. (2013) ‘Marketing Intelligence & Planning’, Journal of Marketing Practice: Applied Marketing Science, 31(7), pg. 807-822.

Stage 6 - Product Development

Stage 6

Product Development

The sixth stage of the new product development process is the product development stage. It is defined by Tzokas, Hultink and Hart (2004) as ‘the design and manufacturing of several prototypes’, however, in the Business Dictionary (2015) it is further described as the ‘modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche’. Therefore, it is bringing the idea you have had in the other stages to life and into a physical form such as prototypes of the product and developing the brand you will be using.  Having these physical representations of the product will further allow you to gather feedback on the product. With this information it will allow the organisation to make adjustments to the product depending on the reaction of the market to the prototype. Different mediums can be used to develop and advertise the prototypes, such as short promotional videos and posters, to best get the message of the product across to the target market.

An example of the product development process is the England Cricket Board’s new under 19 Twenty 20 competition. The aim of the competition was ‘keeping U19 players in club cricket’ (ECB, 2014). They came up with the idea and they created four prototype competitions in different areas to test how well this new competition will work. Therefore, these four competitions are the prototype product and they can receive feedback from these four competitions and the clubs that competed in it, to see what worked well and what can be improved when the new competition is run across the country.  They have also created the brand to run alongside the professional T20 competition, the NatWest T20 Blast, which will ensure the competition is well advertised and that people are aware of it. These prototype competitions have been used to create a promotional video for the new competition to advertise it at the target market. 

As discussed in the earlier blogs, the concept being worked through the new product development process is a relay F1 format. As discussed, we will be using cars previously used in the Formula One season therefore no prototype of cars can be made. However, the way to test the event will be to run a small race at the British Grand Prix and this means we will have the spectators there watching and will allow feedback to be gathered. With this information decisions will be made on how to improve the format before moving on to fully running the event and a season. The concept will be branded by the name of R1 Racing (Logo in Appendix A), this will mean that people will still associate the format to Formula One and will attract the supporters of that format to watch this new one. However, the use of exciting words will try to appeal to new fans and feedback can be gathered and adjustments can be made if this does not work.

Appendices

Appendix A – The R1 Racing Logo

Reference List

• Business Dictionary (2015) Product Development. Available at: http://www.businessdictionary.com/definition/product-development.html (Accessed: 19^th January 2015).
• ECB (2014) NatWest U19 Club T20. Available at: http://www.ecb.co.uk/news/non-first-class/natwest-u19-club-t20 (Accessed: 19^th January 2015).
• Tzokas, N., Hultink, E. & Hart, S. (2004) ‘Navigating the new product development process’, Industrial Marketing Management, 33 (2004), pg. 619 – 626.

Stage 5 - Business Analysis

Stage 5

Business Analysis

The fifth stage of the new product development process is the business analysis stage. It is described by Kotler et al. (2013, pg. 281) as ‘a review of the sales, costs and profit projections for a new product to find out whether they satisfy the company’s objectives’, and therefore this shows, that this stage is based around the financial side of the new concept. They also indicate that three key areas make up this stage, which are sales, costs and profit projections, and for any new concept you have to assess how each three will do. Firstly, Kotler et al. (2013, pg. 281) go on to say that ‘to estimate sales, the company might look at the sales history of similar products and conduct market surveys’; this will mean you can assess how successful the concept will be.  Secondly, costs will be vital because they will determine where you are placed in the market, the more expensive; the more high-end your product will be. Finally, profit projections will mean you can assess if the concept will be a worthwhile investment in both the short-term and long-term.

You can see the business analysis stage in the emergence of the International Premier Tennis League (IPTL) this year. The founder Mahesh Bhupathi, used cricket’s Indian Premier League as a model to see how his shorter format could be a success in the Asian market. He stated that ‘six years ago the IPL was launched (in India) and it has become a rousing success’. This shows an example of estimating sales by looking at a similar model. They also saw a chance to ‘tap the potentially enormous market in Asia’, therefore they identified that a concept such as this would have a huge demand and therefore sales of tickets and merchandise would be considerable. They also planned to have sponsors to pay the players’ salaries which had been planned to be between US$4m and US$10m.

In relation to the new concept of relay Formula One, it is believed that this has the potential to be profitable. James Allen of the Financial Times (2014) indicates that the decline in TV audience in Formula One is ‘estimated at 10 per cent’, therefore this shows that people are becoming uninterested and a new exciting concept may attract the viewer’s attention again. It is hoped to thus attract the already established Formula One teams, therefore they will have the cars already to race. Firstly, races will only be held within Europe, therefore travel costs will not be large, however, if the sport begins to grow, races will begin to take place further afield and more sponsors will need to be sought after. Ticket prices for the event will be considerably cheaper than that of Formula One, which again will attract people to the event. It costs approximately £170 pounds for general admission to the British Grand Prix, however, tickets for relay Formula One will be available for around £70, which will be considerably more attractive to the market.

Reference List

•  Allen, J. (2014) Inequalities and fall in TV audiences take their toll. Available at: http://im.ft-static.com/content/images/8449b0ec-5f18-11e4-a807-00144feabdc0.pdf (Accessed: 10 December 2014). 
•  Formula One (2014) Formula One Tickets. Available at: http://tickets.formula1.com/ (Accessed: 10 December 2014).
• Kotler, P. & Armstrong, G. & Harris, L. & Piercy, N. (2013) Principles of Marketing. (6^th edn) Harlow: Pearson.
• NDTV Sports (2013) Mahesh Bhupathi unveils plan for IPL-style tennis league. Available at: http://sports.ndtv.com/french-open-2013/news/208302-mahesh-bhupathi-unveils-plan-for-international-premier-tennis-league (Accessed: 10 December 2014).
• Pathak, H. (2014) The Coca-Cola IPTL: How and why did the revolutionary event come into being? Available at: http://essentiallysports.com/theorization-tee-itpl/ (Accessed: 10 December 2014).  

Stage 4 - Marketing Strategy and Development

Stage 4

Marketing Strategy and Development

The fourth stage of the new product development process is marketing strategy and development. Marketing Strategy is defined in the Business Dictionary (2014) as ‘strategy that combines all of its marketing goals into one comprehensive plan’. Therefore, in this stage you will analyse your preferred target market and assess how your new concept will be received in this market. Marketing strategy is also defined by Shankar and Carpenter (2012, pg. 1) as ‘a broad plan of managerial initiatives and activities relating an organisation to its customers and markets’, this means that you plan how you will introduce the concept  to the market and obtain the best long term outcome as possible.  The element of development is where you see if the concept is feasible in the long term with regards to areas such as manufacturing. Also, if needed a prototype of any new equipment needed in the new sport concept would be produced, to again, check if the concept will still work in practice. 

An example of a sporting product that has gone through this stage is the iGolf mobile app. In their marketing plan for the product, they go into detail on how and why they will market their application. They say that the main advantage of having the product will be to ‘lower golf scores’ but they also describe how their product will be different to others on the market through quantity of data, reliability and customer service. This shows they have gone to great lengths to market their product and show how it is different to other products in the market place. iGolf also produced a pricing strategy and planned where they would place themselves in the market, and they decided that with the already established database, they would be able to position themselves as a market leader.

In the last blog, it was stated that questionnaires would be used to test how the new concept would be received on the market by both people that are already fans of motor racing, and people who aren’t. A marketing strategy has been developed and it has been decided that the new concept will be aimed at introducing new fans to not only Formula One, but other types of motor racing. At first it will be marketed as a short season appearing outside the already established Formula One season, to make sure it is available for as many people as possible to watch. It is planned that the short season and the short races will appeal to a wider audience and then in the future, the season will become longer if a fan base is developed. At this stage, no development is needed regarding the cars, because the teams will already be established in Formula One and they will be using the cars that were used in the previous season. With this being the case, the teams and sponsors will hopefully see this a new opportunity to invest in something that will grow over time.

Reference List  

• Business Dictionary (2014) Marketing Strategy. Available at:  http://www.businessdictionary.com/definition/marketing-strategy.html (Accessed: 2^nd December 2014).
•  Shankar, V. & Carpenter, G, S. (ed.) (2012) Handbook of Marketing Strategy. Cheltenham: Edward Elgar. 
• Zazo, A. (no date) iGolf Mobile Marketing Plan. San Diego, CA: L1 Technologies.  

Stage 3 - Concept Development and Testing

New Product Development Process

Stage 3 – Concept Development and Testing

The third stage of the new product development process is concept development and testing. The whole aim of this stage is to gather information and feedback on the concept from the general public and the market you will be entering into. Concept testing is defined in the Dictionary of Business and Management (2009) as ‘a technique used in marketing research to assess the reactions of consumers to a new product or a proposed change to an existing product’.  The best way to retrieve this information is by showing a picture or something that contains minimal information and note the reaction you get. This information can then be collated and then you will be able to see what impact this new sport concept will have on the market when it is put into action. At this stage, your idea is not final and any information received could be used to make improvements to your concept, which in the long term will have benefits to how successful the idea will be. Therefore, this stage is vital when assessing if your concept is going to be successful because if the consumers do not like the idea then they will not watch it meaning it will be a failure.

An example of concept testing and development, is seen in the emergence of Twenty 20 cricket. In 2003, the ECB’s head of marketing, Simon Robertson, commissioned a survey to see why people were not attending cricket anymore and part of this survey included the idea of a new format of cricket. When asked about the possible new format which was twenty 20, only a total of 34% expressed an interest, however, as Martin Williamson (2012) shows ‘of the 34% who expressed interest, most had never attended a county game’. Therefore due to this concept test of twenty 20 the ECB discovered that this format would be worth pursuing because it appealed to a new market and would reinvigorate cricket.  

  

As seen in the last blog, it was decided the concept that will be taken further is the idea of relay Formula One. In this stage, firstly, questionnaires will be made and then these can be asked at Formula One races and at events of similar formats, such as GP2 and Formula E. This way you will be able to see how the concept is received by fans of motor racing and see if they will take to the concept. After this you can take the questionnaire to the wider general public to see if they would be interested in watching the new concept. Even if the fans are not sure about the concept, if the wider general public begin to show an interest this would mean a new audience will be created for motor racing. Taking these questions to fans will mean that if they are not at first supportive you can ask what improvements can made to the concept to enhance it and to appeal to the wider audience.

Reference List

• Williamson, M. (2012) ‘Crash, bang and Pandora's Box is opened - The day the game of cricket was changed forever’, ESPN Cric info. [Online] Available at: http://www.espncricinfo.com/magazine/content/story/579245.html (Accessed: 25th November 2014).
•  Law, J. (ed.) (2009) The Dictionary of Business and Management. Oxford: Oxford University Press.